Here’s Why Estee Lauder Stock Has Rallied More Than 2x Since Late 2018

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EL: Estee Lauder logo
EL
Estee Lauder

Estee Lauder (NYSE: EL) stock price grew more than 2x from around $130 in 2018 end to almost $270 currently, primarily due to favorable changes in its P/S multiple. This does not come as a surprise, as the company has also witnessed a rise in revenue over this period, and revenue per share has risen, helped by a slight decrease in the outstanding share count.

In our interactive dashboard, Why Estee Lauder Stock Moved: EL Stock Has Gained 107% Since 2018, we break down the factors behind this move.

(A) EL’s Total Revenue has grown 30% from $13.7 billion in 2018 to $17.7 billion on an LTM basis

  • EL’s total revenue first rose from $13.7 billion in FY ’18 (EL’s fiscal year ends in June) to $14.9 billion in FY ’19, driven by rising demand from the US and emerging markets.
  • Revenues then dropped to $14.3 billion in FY ’20 due to the pandemic but have since recovered strongly and currently stand even higher at $17.7 billion on an LTM basis.
  • Skin Care sales make up the bulk of EL’s revenues, with $9.48 billion of the company’s sales coming from this segment as of FY ’21, making up almost 60% of total revenue.
  • For details about EL revenues and comparison to peers, see Estee Lauder (EL) Revenue Comparison
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(B) Revenue per share (RPS) increased 32% from $37.17 in 2018 to $49.22 currently

  • EL revenue rose from $13.7 billion in 2018 to $17.7 billion currently, while the outstanding share count decreased from 368 million in 2018 to 360 million currently.
  • Due to this, RPS has risen strongly from $37.17 in FY ’18 to $49.22 currently.

(C) Price-To-Sales (P/S) multiple for EL rose steadily from 3.4x in 2018 to 8.3x in 2021, but stands at 5.5x currently, still more than 1.5x higher than its 2018 level

  • Due to EL’s strong performance since 2018-end, its P/S multiple increased from 3.4x in 2018 to over 8x in 2021.
  • However, amidst current geopolitical tensions dragging down the broader markets, the P/S multiple has pulled back and currently stands at around 5.5x.
  • For additional details about the company’s historical returns and comparison to peers, see Estee Lauder (EL) Stock Return.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 EL Return -5% -24% 267%
 S&P 500 Return -2% -10% 91%
 Trefis MS Portfolio Return -3% -12% 245%

[1] Month-to-date and year-to-date as of 3/9/2022
[2] Cumulative total returns since the end of 2016

 

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